HOUSE RESTORES CAP ON OUTSIDE INCOME

The House of Representatives, heading home for a long weekend recess, Wednesday decided that an extra $7,000 a year from speaking fees wasn`t worth the political heat.

The lawmakers voted 333-68 to undo a parliamentary maneuver the day before that--without debate, a recorded vote or many members present--had lifted the ceiling on outside earned income.

But many members who voted to restore the limit argued that the issue of salaries and outside income should be addressed head on.

''They don`t give themselves the proper salary,'' House Speaker Thomas O`Neill (D., Mass.), who is retiring from Congress at the end of this term, complained before Wednesday`s vote. ''They don`t have the guts and the courage.''

O`Neill suggested that members of Congress should make a minimum of $100,000 a year, substantially more than the current $75,100.

He said the effort to remove the limit on outside earnings and to increase the total amount that could be accepted for speeches had been

''backroom gossip'' in the House since the Senate raised its limit last December.

''As soon as the press picks it up, they change their attitude on it,''

said O`Neill, who came under pressure from Democrats in the wake of Tuesday`s move to allow the matter to come to the floor Wednesday under an expedited procedure.

''It was the wrong thing to do, the wrong time to do it and the wrong way to approach it,'' said Rep. Richard Durbin (D., Ill.), who led the effort to overturn Tuesday`s action.

Rep. David Obey (D., Wis.), author of the 1977 income cap, said outside income creates an ethical dilemma, and he argued that members should address the salary issue.

''We ought to have guts enough to explain to the public that its interest is best served through direct compensation rather than privatizing the Congress,'' Obey told the House Rules Committee as it considered the effort that led to the reversal of Tuesday`s action.

But Rules Committee member Rep. James Quillen (R., Tenn.) argued against any limit on outside earned income.

''It takes away initiative,'' Quillen said. ''What the House has done . . . is made us second-class citizens. I don`t see what`s wrong with our free-enterprise system.''

Tuesday`s move by Rep. John Murtha (D., Pa.), who declined to talk to reporters Wednesday, killed a House rule that had restricted members to no more than 30 percent of their annual salaries in outside income. The limit applied to both money for making speeches to special-interest groups and income earned from other sources.

Murtha`s proposal increased the limit to 40 percent of a member`s annual salary and rescinded the limit on other outside earned income, such as attorney`s fees.

Congressional officials said the rules change would have affected about 18 percent of House members--mainly leaders and committee chairmen who are more in demand as speakers than junior members. These senior members can get enough speaking fees at $2,000 per appearance to reach the legal limit.